AUD/USD 4H chart 1/24/2013 8:40AM EST
Rising Channel: I noted AUD/USD was cracking the rising channel support in the previous update. Well, the result was a failed breakout, that lead to a rally that tested a key previous resistance at 1.0578. The RSI meanwhile was stuck between 40 and 60, and really maintained a bullish stance as it held above 40 because it had previously tagged 70 as a sign of bullish momentum. Today, all this changed. The rising trendline is clearly broken, and the RSI reading is breaking below 40, breaking that bullish momentum bias.
Targets: The break has already got to the 1.0470, 50% retracement of the Dec-Jan rally. Before considering the full target of a return to 1.0344, let’s consider 61.8% retracement at 1.0440, and also a pivot area around 1.04, which is near the 78.6% retracement at 1.0398.
Pullback: Watch for possible pullback, which should not climb back above 1.05 in a bearish outlook, and if it climbs back above 1.0525, this bearish outlook is really suspect, and a bullish outlook can even be considered, but it would be too messy to be confident of either direction in that scenario.
Fan Yang CMT is a forex trader, analyst, educator and Chief Technical Strategist for FXTimes – provider of Forex News, Analysis, Education, Videos, Charts, and other trading resources.
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